The Merchant Processing Guru Tip# 21: Direct processing with Visa Myth.
There are a lot of claims out there where some companies or their reps are claiming that they are direct with Visa so you will be cutting out any middlemen with them, therefore saving you money. I would like to dispel this myth simply by proving to everyone that neither Visa, MasterCard nor Discover have any relationship directly with anyone other than with the banks and processors (ISO’s/MSP’s) they work with. Not to be confused with merchant aggregation, I am talking about your own merchant account, not the use of another (Aggregators) account.
Banks issue Visa, MasterCard or Discover cards, you cannot contact Visa to get a credit card, you have to deal with a bank to get a credit card. The same is true when processing those credit cards, you have to work with a Visa approved Acquirer of which there are several. These Acquirers are banks, they use processors to process all of the data that is transmitted daily and all Visa & MasterCard do is monitor the activity and set the rules by which everyone involved with this process must abide by. See link to Visa here: http://usa.visa.com/merchants/new_acceptance/how_it_works.html
So, if the processor processes the data, the money must be processed (or moved) by the bank so every processor has to have a relationship or partnership with an “Acquiring Bank” and vice-versa. The banks do not typically choose to do the data processing themselves, it is more cost effective to use a processor with a Visa & MasterCard approved platform to do this. It is the banks job to move the money from each cardholder to the merchant via the ACH network when the cardholder runs a transaction for purchase of a product or service.
What these people are saying when they are telling you they are direct with Visa & MasterCard is half true as they are probably working with one on the approved Acquirers but it is also extremely likely that you are already processing with one of these approved Acquirers anyway. So don’t fall for this trick to make you think you are getting a better deal just by working with them, chances are you are not. If they have to use tactics like that to win business and don’t show you anything of substance to prove that they are actually saving you money or providing you with some real benefit, then send them packing.